What are options?
Options are contracts that give the holder the right to buy or sell 100
shares of a specific stock at a specific price (ie: the strike price) up until
the option contract expires. A call option conveys the right to buy, while a put
option conveys the right to sell. Read More
Why trade options?
Options allow the investor to manage risk or speculate on the price movement
of a stock. In the latter case, an investor can use options to speculate on a
stock using much less capital than if he were to simply buy the stock outright
or short the stock outright, yet he will gain the same profit or loss exposure.
How are options priced?
Options are priced using a pricing model, which is a complex mathematical
formula. Although many different option pricing models exist, the most popular
one is the Black-Scholes model. Read More
What are the Greeks?
The Greeks tell you how much the price of an option will change when certain
other variables change. In addition to volatility, the Greeks can also be
obtained with an option pricing model. The variables and their related Greeks
are shown in the table below. Read More